Worcester Redevelopment Authority could front money for Union Station brewery

Thomas Caywood TELEGRAM & GAZETTE STAFF

Published Friday November 9, 2012 at 6:00 am

A request for bids sent out by the city’s Purchasing Division late last month has raised eyebrows and prompted some wags to wonder if the folks at City Hall are parched.

The package seeks bids for the sale, delivery and installation of a dozen pages worth of specialized brewery equipment, from a 2,520-gallon “cold liquor tank” to a bottling machine capable of processing 40 bottles per minute.

While the price of all the beer gear won’t be known until the bids are opened at City Hall next Wednesday, the cost could easily top six figures.

The city sent out the request for bids on behalf of the Worcester Redevelopment Authority in the hopes that it might help the quasi-public, taxpayer-supported agency drown its sorrows over the paucity of tenants at Union Station.

The WRA, which owns Union Station, has been in talks with Wormtown Brewery about a lease arrangement under which the company would move its small craft beer brewery from Peppercorn’s Grille on Park Avenue to a larger industrial space in the lower level of the historic train station.

If the two sides reach a deal, the WRA would front the money for the brewery equipment and then lease it back to Wormtown Brewery under a rent-to-own arrangement, said WRA Chief Executive Officer Timothy J. McGourthy, who also is the city’s chief economic development official.

Mr. McGourthy said the request for bids was sent out now to speed things along in the event an acceptable deal is worked out with Wormtown Brewery on the Union Station lease. The WRA is under no obligation to actually buy the brewery equipment if the negotiations break down, he said.

“There would have to be sufficient collateral to ensure the equipment portion of this would be paid off. We’re not going to go forward until we have sufficient security,” he said, later adding, “It’s well within the WRA’s authority to do something like this.”

The City Council gave initial approval last month to a $400,000 loan order to pay for the brewery equipment and fitting out the space for the brewery.

Councilor-at-large Konstantina B. Lukes said she initially was taken aback by the request for taxpayer money to buy brewery equipment of all things.

“I’ll support it because Union Station has been empty for so long, but my real question is: To what extent do these economic development incentives really accomplish anything?” Mrs. Lukes said. “We could loan the money to them in some other form, and they go buy the brewery equipment. The bottom line is they’re getting an economic benefit from the city however we label it.”

Wormtown Brewery owner Thomas Oliveri said the business has outgrown its location adjacent to Peppercorn’s Grille, which he also owns, and that the 7,500-square-foot Union Station space would allow him to boost production and hire a few additional brewers right away.

Mr. Oliveri said the brewery equipment he owns also is too small for the growing business. The Union Station location and higher-capacity brewing gear would allow him to double production immediately, he said.

“The space is just ideal. It has the high ceilings we’re looking for, the square footage we’re looking for, and there’s no finish work in there that we don’t need. No woodwork. It’s all cement, which is good when you’re spraying water around,” Mr. Oliveri said.

The brewing setup specified in detail in the city bid package would triple the company’s production capacity from the equivalent of 20 kegs a batch to 60 kegs a batch.

Mr. Oliveri, a self-described advocate of “small government,” said the proposal for the city to front the money for the equipment saves him the trouble of having to get a bank loan while, at the same time, furthering the city’s interest in getting viable tenants into Union Station. He said such a deal wouldn’t conflict with his previously stated position critical of “tax and spend” public policy.

“It’s a different story. I’m partnering with the city. It would be beneficial to everybody, myself, Wormtown Brewery and the city,” he said. “We’re looking to bring some action downtown. It’s abysmal down there right now.”

If Wormtown Brewery’s sales grew to the point it was running the larger brewing system at full capacity, the company could grow from three employees now to perhaps a dozen or more, he said.

Mr. McGourthy said the WRA and city has to be willing to work with tenants to fill long vacant rental spaces at Union Station, especially an unfinished one adjacent to the loading docks.

Wormtown Brewery has no direct local competitor to cry foul about the competitive advantage the company would gain by tapping the city’s deep pockets for expansion capital, but, even if it did, a local business group isn’t necessarily opposed to the idea.

“Are businesses upset that the city may be helping one as opposed to another? We haven’t heard that,” said Stuart Loosemore, director of government affairs and public policy for the Worcester Regional Chamber of Commerce. “This is what we’ve been asking for, finding incentives for business to develop in the city.”

Mr. Loosemore said he understands why a taxpayer mistakenly thinking the city was getting into the brewing business would be leery.

“But this is no different than the city offering a low-interest loan for the company to buy brewery equipment,” he said. “I would hope the city is putting a substantial collateral requirement in the agreement in the event something went wrong.”

The WRA’s Mr. McGourthy said that’s the only way the deal will go forward.